1. Technical Field
This invention relates generally to electronic commerce and the Internet. More particularly, the invention provides a method and apparatus for allowing two parties to negotiate and execute a contract, such as a real estate lease or a sale, over a computer network such as the Internet.
2. Related Information
Corporations frequently need to lease real estate in the form of offices, laboratories, warehouses, and other spaces. Alternatively, companies sometimes have surplus office space that could be sublet to tenants for profit or cost recovery.
Typically, companies will hire real estate brokers to search for and conduct preliminary negotiations regarding potential leasing arrangements. After preliminary details have been worked out, lawyers acting on behalf of the prospective landlords and tenants negotiate a detailed lease agreement. This process may involve numerous meetings, telephone calls, faxes, exchanges of draft documents, and the like. It also may involve various middlemen in addition to lawyers and real estate brokers. For example, if architectural or mechanical improvements are needed, one or both of the parties may hire outside contractors (e.g., architects or engineers) to assist in evaluation of lease properties and/or to propose modifications to the property.
Because of human nature and the typically unstructured methods by which leases are negotiated, parties sometimes backtrack on previously agreed-upon provisions or demand changes to lease provisions that were previously believed to be the subject of agreement. Parties may spend a large amount of time negotiating details of lease provisions that later become moot (e.g., the leasehold improvements to the premises) because of disagreements over other provisions (e.g., term of the lease). Consequently, acquiring or leasing real estate in the corporate market incurs large costs and time because of intermediaries and human interaction required to negotiate lease provisions.
Various web-based listing services have sprung up in recent years to service the real estate needs of companies looking for space, including sales, leases, and auctions. Companies such as Loopnet (www.loopnet.com), PropertyFirst (www.propertyfirst.com), and EGPropertyLink (www.egpropertylink.co.uk) provide brokerage and listing services in an attempt to facilitate real estate transactions over the Internet. These services primarily focus on listing properties, and do little to facilitate the negotiation or consummation of real estate deals. In particular, these services do not provide process management tools to guide landlords and tenants through a structured deal. Furthermore, they do not provide a mechanism for monitoring the progress of a transaction after signature of the lease (e.g., completion of works by landlord and tenant), nor do they provide any mechanism to integrate into the process an evaluation of qualitative aspects of the transaction such as cross-border difficulties and delays, and the effectiveness of local service providers such as brokers and architects.
The negotiation of real estate leases between parties located in different countries involves additional inefficiencies and drawbacks. For example, because of different time zones, the times available for parties to meet or hold telephone conferences may be limited. Differences in currencies (e.g.,dollars versus Euros) and metrics (e.g., square feet versus square meters) add complexity to the negotiation process, thus driving up costs. Language barriers may also add additional costs.
It may be difficult for a U.S.-based prospective tenant to hire outside contractors, such as architects, in another country. Furthermore, the procedures and customs used by foreign real estate brokers and intermediaries to negotiate a corporate lease may be different depending on the country, language, and regulations. Legal documents drafted in one country may look substantially different from those typically drafted under U.S. laws and customs. These and other differences have made it very costly to negotiate leases for commercial office space across international borders.
More generally, negotiating contracts of various types, such as a corporate procurement contract or a contract related to supply-chain management applications, can incur many of the disadvantages and inefficiencies discussed above. Consequently, there exists a need to streamline the process by which prospective parties to a contract can negotiate and consummate a contract.